Getting laid off....Can I roll my measly pension into my 401K?

[mrblotto]

Pretty much like the title states. My last day is 6/22. When I started ('98), my company had a pension plan. Then, after 2 or 3 years, they killed it. I have like 30K in there. It's just been kinda sitting there doing nothing. I'd like to just roll it into my 401K, but dont know if that's possible.

I realize this isn't the best place to ask, but I know I'll get non-BS answers (mostly lol) from y'all instead of some legalese crap no one can understand.

Thx in advance *salutes*
Blah-Toe

 

[KB]

Yes you can and yes I would do it.

Can You Roll Over a Pension Plan Into an IRA?

If you qualify to receive a pension from your employer when you reach retirement, you have the luxury of extra retirement income -- and the responsibility to manage it. Your employer drafts most of the rules about how you can handle your pension, but if you’re allowed to take a lump-sum payment...

finance.zacks.com

 

[nakedfrog]

Nope, pull it out and celebrate with hookers and blow.

This concludes the obligatory reference for the money-involving thread.

 

[pete6032]

The answer is yes.

 

[rh71]

I have the same situation with my pension - it has been sitting at just below $30k for almost 20 years.

 

[mrblotto]

Thank you all for the info

Just called our.....what do you call them.......financial advisors? I dunno, it's thru Fidelity. Like above, the answer is yes. You pretty much have to wait until your last day (or after) to make the change.

You can also be eligible to take money out if the virus has had any impact on your livelihood. My company was kind enough to explicitly state my layoff is NOT Covid19 related, so that's a no-go for us. We weren't planning on taking any out anyhow. But just a good FYI for y'all.

I also asked if after my separation if there are any monthly fees for managing my portfolio. No fees evidently...hooray. I'm guessing they're taking a little bit from commisions of something? Wife wonders how much are they getting, and would it benefit us to look around for other options?

Wife had a ton of questions to ask, I'm on the phone trying to listen to both people at once. Pisses me off when that happens. So I'll end up calling back to find out how much they do take out for managing. Then there'll be more questions.....argh

Anyhow, hope this info helps y'all out in some form or fashion

 

[Ajay]

Nope, pull it out and celebrate with hookers and blow.

This concludes the obligatory reference for the money-involving thread.

How much do you get for $30K? Asking for a friend.

PS Good luck @mrblotto !

 

[s0me0nesmind1]

Pretty much like the title states. My last day is 6/22. When I started ('98), my company had a pension plan. Then, after 2 or 3 years, they killed it. I have like 30K in there. It's just been kinda sitting there doing nothing. I'd like to just roll it into my 401K, but dont know if that's possible.

I realize this isn't the best place to ask, but I know I'll get non-BS answers (mostly lol) from y'all instead of some legalese crap no one can understand.

Thx in advance *salutes*
Blah-Toe

It's just like a 401k in that it's cosnidered a retirement account. If you take money (via distribution, not rollover) out of it - you will have to pay taxes (+ A potential penalty on it)

Yes, you can get it rolled over.

After I quit my last job I had about $12k in their pension fund. A few weeks later they sent me a huge packet of papers of what my different options are... one being to roll it over.

 

[thestrangebrew1]

You can also be eligible to take money out if the virus has had any impact on your livelihood. My company was kind enough to explicitly state my layoff is NOT Covid19 related, so that's a no-go for us.

If you've been there since '98, what other reason than Covid would they be laying you off? Seems kinda dickish to me. If they've been impacted by Covid, isn't there aid they can get to avoid laying off? I feel for you man and I'm pretty sure I'll be getting laid off within the next year, working for the local government. Just seems weird they say that.

 

[darkswordsman17]

Thank you all for the info

Just called our.....what do you call them.......financial advisors? I dunno, it's thru Fidelity. Like above, the answer is yes. You pretty much have to wait until your last day (or after) to make the change.

You can also be eligible to take money out if the virus has had any impact on your livelihood. My company was kind enough to explicitly state my layoff is NOT Covid19 related, so that's a no-go for us. We weren't planning on taking any out anyhow. But just a good FYI for y'all FU for me.

I also asked if after my separation if there are any monthly fees for managing my portfolio. No fees evidently...hooray. I'm guessing they're taking a little bit from commisions of something? Wife wonders how much are they getting, and would it benefit us to look around for other options?

Wife had a ton of questions to ask, I'm on the phone trying to listen to both people at once. Pisses me off when that happens. So I'll end up calling back to find out how much they do take out for managing. Then there'll be more questions.....argh

Anyhow, hope this info helps y'all out in some form or fashion

Fixed that for ya.

 

[zinfamous]

I guess it depends on if you meet the qualifications for being vested, and what payout plan they offer at whatever designated withdrawal age. I'd look at that first before you consider rolling it into a private IRA. ...most likely, though, with your vested time and amount, it wouldn't be worth it for monthly or lump sum payout @ 65 or 69 or whatever.

Anyway, that's the only additional thing I have to add to what others have said, which is correct.

I've been thinking about doing this myself with a 7 year State of CA pension, and the potential for a decent lump of cash now and the market likely continuing to tank through July, if not later, and gaining decent value off of that in the short term, well above what this promises in another 20+ years for me.

 

[zinfamous]

If you've been there since '98, what other reason than Covid would they be laying you off? Seems kinda dickish to me. If they've been impacted by Covid, isn't there aid they can get to avoid laying off? I feel for you man and I'm pretty sure I'll be getting laid off within the next year, working for the local government. Just seems weird they say that.

YMMV, but from what I have been reading about this, the state requirements to claim unemployment related to COVID don't really require a lot of proof. ANd honestly, that makes sense to me. In OP's case, it's hard to deny that this isn't COVID-related, because that is essentially what the company is making their decision on. At least, it would be be easy enough to argue that they are.

The employee, then, essentially becomes a victim of COVID-related unemployment in this way. I think the language has been updated in these policies to reflect the fact that the pandemic essentially effects every sector of people's lives in many ways. It certainly doesn't have to be a direct impact, like being attached to a ventilator for a week or so.

 

[thestrangebrew1]

That makes sense. If/when I get laid off I guess I can say it's indirectly related to Covid (loss of sales tax because of SiP).

OP good luck! Layoffs suck, hope you're able to find something soon!

 

[ultimatebob]

I have the same situation with my pension - it has been sitting at just below $30k for almost 20 years.

I had the same cash balance pension that you had (I think), and I rolled it into a Fidelity rollover IRA. It even uses the same NetBenefits logon credentials that it did before.

 

[rh71]

I just checked in on it and it says if I take it out at 65, I can get a lump sum of $105k? If I'm mathing right, that works out to 6% return every year for the next 20 years. Why wouldn't I do that instead of putting it in 401k? Is it because the risk is the same?

I have left the original company but I've been allowed to keep it there...

 

[ultimatebob]

I just checked in on it and it says if I take it out at 65, I can get a lump sum of $105k? If I'm mathing right, that works out to 6% return every year for the next 20 years. Why wouldn't I do that instead of putting it in 401k? Is it because the risk is the same?

I have left the original company but I've been allowed to keep it there...

Funny... I don't remember the return being that good on my cash balance pension. I was only getting something like 3% interest before I rolled it over. Over the past 11 years I more than doubled my money, so I think that I made the right choice.

What I really enjoyed is that my best performing investment by far was the Fidelity Select Software and IT mutual fund, which basically invested in all of the competitors of my former employer

 

[zinfamous]

I just checked in on it and it says if I take it out at 65, I can get a lump sum of $105k? If I'm mathing right, that works out to 6% return every year for the next 20 years. Why wouldn't I do that instead of putting it in 401k? Is it because the risk is the same?

I have left the original company but I've been allowed to keep it there...

Right. I did the same math not too long ago, using the same, generally conservative "safe" assumption about simple Index fund growth over that time.

It doesn't come out to much difference in value, however--you have no control over it during that time. This is why I am thinking about taking out the cash to invest directly in another likely market low. ...granted, that is market timing and even if you hit it at this moment in time, what is to prevent further collapses and the same ~20-30 year result of 6% annual? ....nothing, really. Result is the same. ....but at least you have the potential to do better.

Of course, if you're interested in actually using that cash to do some trading in your IRA or 401, then you certainly have the potential to do way better...well, or way way worse.

 

[Lanyap]

Move it to a rollover IRA but don’t merge it with a traditional IRA or it becomes a record keeping nightmare. Fidelity and Vanguard typically don’t charge special IRA fees but get their money when you allocate your money into mutual funds. The biggest challenge you will have is determining the best asset allocation for your rollover funds. Mutual funds, ETFs and how much to allocate to stocks, bonds and cash will be a challenge especially with the current market.

 

[BarkingGhostar]

Laid off after +20 years in the company. I guess the end is near for the company.

 

[s0me0nesmind1]

Laid off after +20 years in the company. I guess the end is near for the company.

You're just a number to every employer. They don't care about you in the slightest.

Just like you shouldn't care about them and be under no obligation to stay at your employer at any time. The moment an employer tells me something like "times are tough, so we aren't giving raises this year" or reducing benefits, etc... is the moment I start looking.

 

[Zeze]

Right. I did the same math not too long ago, using the same, generally conservative "safe" assumption about simple Index fund growth over that time.

It doesn't come out to much difference in value, however--you have no control over it during that time. This is why I am thinking about taking out the cash to invest directly in another likely market low. ...granted, that is market timing and even if you hit it at this moment in time, what is to prevent further collapses and the same ~20-30 year result of 6% annual? ....nothing, really. Result is the same. ....but at least you have the potential to do better.

Of course, if you're interested in actually using that cash to do some trading in your IRA or 401, then you certainly have the potential to do way better...well, or way way worse.

Is their any taxable event implication for taking it out - any CPAs here? What happened to our resident Anandtech CPA? I think his handle was 'CPA'.

 

[s0me0nesmind1]

Is their any taxable event implication for taking it out - any CPAs here? What happened to our resident Anandtech CPA? I think his handle was 'CPA'.

Like I said - It's a qualified retirement account. So long as you roll it over into another qualified retirement account (401k, IRA, etc) that is pre-tax then there should be no taxable event.

If you decide to instead take the money out (payout, not rolling it over) you would owe income tax on the full amount, as well as possibly a 10% penalty if you aren't over the age of 55.

 

[mrblotto]

If you've been there since '98, what other reason than Covid would they be laying you off? Seems kinda dickish to me. If they've been impacted by Covid, isn't there aid they can get to avoid laying off? I feel for you man and I'm pretty sure I'll be getting laid off within the next year, working for the local government. Just seems weird they say that.

A little update
I'm going thru the seperation paperwork (what fun), and haven't seen anything mentioning Covid19. I do know when I received 'the call' my mgr (who is a great guy btw), told me ' <Employer> has advised me to tell you this action is NOT Covid19-related'. So, I'm guessing he was just told to say that.

Not that it matters (or does it?) My job is 90% 'hands on' of computers that are in need of service. Naturally, if no one can go into the office, I can't really do my job. So that would be my rationale if it comes down to brass tacks.

Also, we're putting our house on the market. Around here they usually sell within days thankfully. So I'm neck deep in small projects that I never got around to, taking stuff to the dump (just got rid of an older 2U server with about 10TB storage and 300+ Gb RAM, I just couldn't justify hanging onto it!)
Today I'm gonna see if I can wander into the office and pick up/throw out the shit-ton of things I've accumulated over the years :/

 

[ultimatebob]

Is their any taxable event implication for taking it out - any CPAs here? What happened to our resident Anandtech CPA? I think his handle was 'CPA'.

There shouldn't be a taxable impact if you're rolling the cash balance pension into a Rollover IRA. There wasn't when I did it, anyway.

Bummer to hear that you took that 2U server to the dump. Someone here would have taken it off of your hands in the FS forum

 

[rcpratt]

Sorry to hear that. Good luck selling the house (I hope you're not having to do that because you were laid off?) and finding a new gig.